Express Scripts 2013 Annual Report Download - page 56

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Express Scripts 2013 Annual Report 56
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following table sets forth our schedule of current maturities of our long-term debt as of December 31, 2013,
future minimum lease payments due under noncancellable operating leases of our continuing operations and purchase
commitments (in millions):
Payments Due by Period as of December 31, 2013
Total 2014 2015-2016 2017-2018 Thereafter
Long-term debt(1) $ 17,006.9 $ 2,057.8 $ 6,394.6 $ 3,244.4 $ 5,310.1
Future minimum operating lease payments 366.1 85.0 114.6 81.0 85.5
Future minimum capital lease payments 43.4 14.4 28.8 0.2 —
Purchase commitments(2) 610.7 425.3 160.1 25.3 —
Total contractual cash obligations $ 18,027.1 $ 2,582.5 $ 6,698.1 $ 3,350.9 $ 5,395.6
(1) These payments exclude the interest expense on our revolving credit facility, which requires us to pay interest on
LIBOR plus a margin. Our interest payments fluctuate with changes in LIBOR and in the margin over LIBOR we are
required to pay (see “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Liquidity and Capital Resources — Bank Credit Facility”), as well as the balance outstanding on our
revolving credit facility. Interest payments on our Senior Notes are fixed, and have been included in these amounts.
(2) These amounts consist of required future purchase commitments for materials, supplies, services and fixed assets in the
normal course of business. We do not expect potential payments under these provisions to materially affect results of
operations or financial condition. This conclusion is based upon reasonably likely outcomes derived by reference to
historical experience and current business plans.
The gross liability for uncertain tax positions which could result in future payments is $516.6 million and $500.8
million as of December 31, 2013 and 2012, respectively. We are not able to provide a reasonably reliable estimate of the timing
of future payments relating to the noncurrent obligations. Our net long-term deferred tax liability is $5,440.6 million and
$5,936.5 million as of December 31, 2013 and 2012, respectively. Scheduling payments for deferred tax liabilities could be
misleading since future settlements of these amounts are not the sole determining factor of cash taxes to be paid in future
periods.
IMPACT OF INFLATION
Changes in prices charged by manufacturers and wholesalers for pharmaceuticals affect our revenues and cost of
revenues. Most of our contracts provide that we bill clients based on a generally recognized price index for pharmaceuticals.
Item 7A — Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in interest rates related to debt outstanding under our credit
agreement. Our earnings are subject to change as a result of movements in market interest rates. At December 31, 2013, we had
$2,000.0 million of gross obligations, or $8.6 million net of cash, which were subject to variable rates of interest under our
credit agreement. A hypothetical increase in interest rates of 1% would result in an increase in annual interest expense of
approximately $20.0 million (pre-tax), assuming that obligations subject to variable interest rates remained constant.